The price of nickel began moving up in mid-December 2025 as the market reacted to supply-tightening signals from Indonesia. Indonesia is by far the largest global producer and has been a key driver of oversupply in recent years, which has held the price round the US$15,000-per-tonne level for the better part of a year. Is the case for higher nickel prices coming back?
Pricing:
On March 8, 2022, the price of nickel topped US$100,000 per tonne before the London Metal Exchange (LME) halted trading, something that has not happened previously. The spike was driven initially by the war in the Ukraine and margin calls for Tsingshan Holding Group Co., a large stainless manufacturer in China. Prices since early January of 2023 have been on a downward trajectory from $30,000 per tonne to currently sit just over $17,000 per tonne, a new high since October of 2024.
Supply:
World primary nickel production is expected to be 3.8 million tonnes for 2025 with forecasts of 4.1 million tonnes in 2026. The top five nickel-producing countries (in per cent) are Indonesia (62), Philippines (9), Russia (6), Canada (5), China (3.5), with the French territory of New Caledonia (3) and Australia (3) also producing significant amounts. Production in Indonesia in 2023 was 1.70 million tonnes and increased to 2.27 million tonnes in 2024 with projections of 2.35 million tonnes for 2025.
Canada is the fourth-largest producer globally with mines in Ontario, Quebec, Manitoba and Newfoundland and Labrador. These include the Sudbury Basin in Ontario, a historic sulphide camp with major integrated mining/smelting/refining legacy; the Raglan mine in the Northern Quebec region of Nunavik, a high-grade nickel sulphide mine; Voisey’s Bay in Newfoundland and Labrador, a massive sulphide deposit; and the Thompson Nickel Belt in Manitoba, another massive sulphide deposit with key infrastructure for juniors. Canada has three refineries located in Fort Saskatchewan, Alta., Sudbury, and Long Harbour, Nfld.
Recent financing activity in this space in Canada include Canada Nickel (CNC-X) closing a $15-million bought deal in December, FPX Nickel (FPX-X) announcing a funding contribution from Natural Resources Canada in September, and Core Nickel (CNOC-X) with a $2.25-million flow-through financing in late 2024 for its project in the Thompson Nickel belt.
Given Indonesia produces over 60 per cent of global nickel supply, we need to look at that in more detail. Indonesia’s nickel production has grown almost 12 times since 2016 from 190,000 tonnes that year to the projected 2.35 million tonnes in 2025. Indonesia’s ban on the exports of unprocessed ores, initially in 2014, and tightened further in 2020, led to Chinese companies investing in refining capacity in Indonesia. Prior to 2014, Indonesia only had two nickel smelters operating. The country currently has about 50 nickel smelters operating with 80 more either under construction or in the planning stages. Average production costs in Indonesia are estimated between $11,000 and $16,000 per tonne, less than the $14,000 to $17,000 global (excluding Indonesia) average.
Nickel is broadly classified into: Class 1 or high-grade nickel, which is suitable for batteries and specialty alloys; and Class 2 or “nickel units,” which includes nickel pig iron (NPI), ferronickel, and mixed hydroxide precipitate intermediate, dominant in stainless supply chains. Nickel production in Indonesia (and the Philippines) is from laterite deposits and smelting is done via an RKEP (a rotary kiln) or HPAL (acid leaching) process, whereas Canada, Russia and Australia have sulphide deposits and conventional smelters (flash or electric furnace) to refine the nickel. Because the supply boom has been in Indonesia’s laterite deposits/NPI/HPAL, that market can be oversupplied while battery/high-grade can still tighten.
Demand and demand drivers:
World primary nickel usage is expected to be 3.6 million tonnes in 2025 and 3.8 million tonnes in 2026. The International Energy Agency (IEA) projects global nickel demand will rise to approximately 4.2 million tonnes by 2030.
Historically, close to 70 per cent of refined nickel went into the manufacturing of stainless steel, with that number now closer to 65 per cent. Electric-vehicle battery demand now accounts for 15 per cent of overall nickel production. High-nickel chemistry batteries increase nickel intensity but the rapid scaling of LFP (lithium-iron-phosphate batteries) reduces nickel volume per EV. Recent reports imply Indonesia’s nickel strategy is running into headwinds because EV-battery demand growth is shifting toward LFP along with the increased demand for plug-in hybrids. LFP batteries are cheaper but have a lower energy density which equates to lower distance per charge, especially in cold climates. AI and data centres are also indirectly increasing demand through stainless steel in industrial buildout, cooling, piping, and infrastructure and superalloy demand in power generation and turbines. (Superalloys are metal alloys designed to maintain exceptional mechanical strength, surface stability, and resistance to creep, oxidation, and corrosion at high temperatures.)
Outlook:
Nickel remains well supplied with production surpluses expected through at least 2026 leading to prices remaining range-bound and very near cost of production. Higher-cost producers will face pressure under this scenario. By 2030, the IEA still sees demand well in excess of supply, which will require substaintial price increases or a shift in technology.
More about the author
Brian Donovan, CBV is the President of a Canadian FinTech (https://www.stockcalc.com) based in Miramichi, New Brunswick.
Brian Donovan, CBV, is the president of StockCalc, a Canadian fintech based in Miramichi, N.B.